A Smart Contract is an application that automatically executes, controls, and/or documents contractual terms, events, and actions according to mutual agreement between the contracting parties. Smart Contracts are designed to reduce or eliminate intermediaries, arbitrators, and/or fraud associated with traditional paper contracts. Smart Contracts use blockchain mechanisms to record terms, events and actions.

Existing contracts specifying transaction terms are typically defined on paper and not defined in a computationally structured way. Current Smart Contract technology allows for the structured representation of contract terms that are publicly visible with their defined events and actions easily automated. This information is stored on multiple decentralized copies of a blockchain that is immutable, authoritative, and verifiable. However, current Smart Contract technologies do not provide any mechanism to ensure the confidentiality of contractual terms; how events and actions are defined, or their history. For many contractual relationships, confidentiality is extremely important.

Technologies, products, and services backed by blockchain are generally less scalable when expanding over complex features or procedures. Though simple agreements can take place quickly and efficiently over smart contracts, they lack scale-up over complicated scenarios. Thus, smart contracts can create problems for large businesses when solving more complex contracts.

Fully Homomorphic Encryption (FHE) can be used to create Smart Contracts on top of public, permissionless blockchains. Data always remains encrypted, even in use, eliminating data exposure, enabling transaction integrity and automation, increasing efficiency and transaction accuracy, and preventing fraud. To achieve this, FHE is used along with existing blockchain-based Smart Contract methodology to add confidentially guarantees to contractual terms, events, and actions. With FHE, all contractual terms, events, and actions, their definitions, and histories are encrypted and provably secure from exposure or breach. Moreover, by leveraging FHE’s ability to compute on encrypted data, Smart Contracts support full automation of contractual event recognition and actions without ever exposing any underlying information.

Cornami’s scalable FHE performance and latency feature allow FHE-enabled Smart Contracts the flexibility to achieve use case-specific Service Level Agreement (SLA) response times. A key aspect of Cornami FHE hardware acceleration is its ability to correlate performance and latency with the number of Cornami servers deployed. With Cornami as the execution platform for FHE-enabled Smart Contracts, users can define SLA response times by deploying an appropriate number of Cornami servers.

Maintaining the confidentiality of contractual terms, events, and actions is a critical requirement of any system that defines, operates, and records business relationships. With FHE-enabled Smart Contracts, all contractual terms, events, and actions are encrypted using FHE, a lattice-based cryptographic system, defined as Post Quantum Cryptography (PQC), and immune from legacy and quantum computing attacks. With FHE, Smart Contract blockchain entries, while publicly visible, remain encrypted throughout their computational lifecycle. These entries are not decrypted for execution and/or updates to occur and plaintext data and decryption keys are never exposed. When plaintext information is required, encrypted data can be downloaded to a secure trusted environment, away from the public blockchain, to be decrypted and viewed.

With FHE-enabled Smart Contracts, trust between contractual partners is no longer a fundamental requirement. Businesses can now fully automate the operation of their relationships maintaining strict confidentiality while also reducing risks and achieving higher efficiencies. Compared to paper-based contracts, the benefits of FHE-enabled Smart Contracts are:

• All specifics of a contractual relationship as they exist on the blockchain, its terms, history, event triggers, and actions are encrypted and fully protected against unauthorized disclosure and/or breach.
• Contractual terms are fully automated significantly decreasing processing time and boosting overall operational efficiency and accuracy.
• The chances of contractual misinterpretation, forgery, and/or fraud are minimized.
• It’s relatively easy to audit the terms, events, and actions of a business relationship.

If the terms of an agreement are satisfied, then the smart contract executes automatically, minimizing the types of human error common at this stage of traditional manual transactions.

Current Smart Contract technologies provide simultaneous or near simultaneous transactions across multiple parties to deliver high efficiency, full security, and transparency to transaction execution. FHE-enabled Smart Contracts add the additional benefits of confidentiality. By encrypting all public blockchain entries using FHE, users can be assured that the confidentiality of transaction terms, events, actions, and their histories remains fully protected and accessible only by authorized participants.

FHE-enabled Smart Contracts address the requirement of maintaining the total confidentiality of contractual terms, events, and history. Current Smart Contract offerings either post their blockchain entries in plaintext or encrypt them using non-FHE techniques. Given that blockchains are publicly visible and Smart Contract platforms are hosted on untrusted Cloud platforms, without FHE, the computation required to recognize events or take requisite actions must take place on plaintext data. This directly exposes business terms, events, and actions to exposure or breach. FHE, when integrated with Smart Contracts, guarantees full privacy will be maintained while automating the execution of contract terms.

Easier to execute than a traditional contract. There’s no need to pay legal fees, hidden expenses, or human intervention.  Eliminates the overhead of intermediaries.